US computer chip company Intel has announced it is to buy Israel-based driverless car technology firm Mobileye for £12.5bn.

Mobileye develops autonomous driving systems for the industry and has contracts with 27 car makers to run software for the likes of autonomous emergency braking systems and advanced cruise control tools.

It is the US chipmaker’s first major foray into the automotive industry, although last year the company announced it and Mobileye would put 40 self-driving BMWs on the road by the end of this year.  

The buyout follows on from other US technology giants, such as Google and Microsoft, dipping their toes into the car industry.

According to Intel, the driverless car market could be worth as much as £57bn by 2030.

“As cars progress from assisted driving to fully autonomous, they are increasingly becoming data centres on wheels,” the company said in a statement.

Last year, Mobileye’s pre-tax profit jumped from £65.3m to £103.3m.

Intel said the buyout of Mobileye, which was formed in 1999, is “expected to accelerate innovation for the automotive industry and position Intel as a leading provider in the market for autonomous vehicles”.

The US chipmaker claimed that by 2020, driverless cars would be able to generate 4,000GB of data a day, with the firm saying this amount of data could create “large-scale opportunities” for its advanced processors and memory units.

“This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” said Brian Krzanich, Intel’s CEO. “Intel provides critical foundational technologies for autonomous driving including plotting the car’s path and making real-time driving decisions.

“Mobileye brings the industry’s best automotive-grade computer vision, and strong momentum with automakers and suppliers. Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.”